Bank shareholders have low customer loyalty but big potential

Thursday, April 16th, 2015

Over 1.5 million Australians have shares in the big four banks but on average only 41.1% of each bank’s shareholders are customers of the bank. This apparent lack of loyalty represents a big growth potential for the major banks. These findings are from the Roy Morgan Research Single Source survey which includes interviews with over 1,500 major bank shareholders pa.

CBA shareholders clearly have the highest customer loyalty among the big four, but even so, less than half (49.1%) are CBA customers. The other major banks dealt with by CBA shareholders are Westpac (25.5%), ANZ (21.6%) and NAB (19.7%).

Big Four Banks’ shareholders — banks dealt with

Westpac is the next best performer, with 39.5% of its shareholders being customers of the bank (29.5 % are customers of the CBA). A little over one-third of ANZ (37.1%) and NAB (34.4%) shareholders are customers of their bank.

“The fact that such a low proportion of major banks’ shareholders are customers of the bank where they hold shares is somewhat surprising. This indicates that there is a disconnect between investment and banking decisions, with shareholders obviously chasing the best deal for their personal banking and the best investment regardless of where they bank.

“It is likely that the banks will need to offer some incentive or special deal to induce shareholders to bank with them, but it appears from this analysis that past attempts have had limited success. Currently NAB offers specific benefits for shareholders with a minimum of 500 shares, while the other major banks do not appear to offer shareholder benefits.

“The potential to increase business from shareholders is considerable. Over 450,000 CBA shareholders are not customers of the CBA; while the NAB has a potential of over 400,000. For the ANZ and Westpac the figure is over 300,000. Given that these shareholders are likely to have a favourable opinion of their bank from an investment perspective, the next step is to convert them into customers. Finding the right inducement and making shareholders aware of it is now the challenge.”

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Roy Morgan Research is Australia's best known and longest established market research and public opinion survey company. Roy Morgan Single Source is thorough, accurate, and provides comprehensive, directly applicable information about current and future customers. It is unique in that it directs all the questions to each individual from a base survey sample of around 55,000 interviews in Australia and 15,000 interviews in New Zealand annually - the largest Single Source databases in the world. The questions asked relate to lifestyle and attitudes, media consumption habits (including TV, radio, newspapers, magazines, cinema, catalogues, pay TV and the Internet), brand and product usage, purchase intentions, retail visitations, service provider preferences, financial information and recreation and leisure activities. This lead product is supported by a nationally networked, consultancy-orientated market research capability.Samantha Wilson P: (03) 9224 5268W:www.roymorgan.com